Philips & Siemens Set Caution for Conglomerates and Market (PHG, SI, GE)

Koninklijke Philips Electronics NV (NYSE: PHG) is feeling the woes of Europe catching up to it.  It should probably be only a limited surprise that the European conglomerate issued an earnings warning when you have seen the news of late, but shares are indicated lower as well.  In a separate report, Siemens AG (NYSE: SI) was also noted by the WSJ as having its CFO note that current earnings expectations may be too high.

Philips has not released earnings, but the preliminary figures were shown as free cash flow of about 1 billion Euro versus about 1.2 billion in the same period a year earlier.  Sales were put up in the single digit,  but margins have contracted to about 7% of sales from about 9% the year earlier and now the company expects a profit from operations in the 500 million Euro area.  

The reasons cites are the broad weakness in Europe, with a particular note to healthcare spending and on the lighting business.

With comments out from Siemens AG, we would be watching to make sure that the overlap does not pressure shares of General Electric Co. (NYSE: GE) as a rival conglomerate which also competes in lighting and healthcare spending with Philips.

Philips s indicated down about $1.00 around $19.15 and Siemens is indicated down about $1.50 around $95.75 in New York, and so far we are not seeing any real negative indications in General Electric.

 JON C. OGG